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Midland Builders7/14/2005
e and Strict Responsibility Misrepresentation
Whether the circuit court properly granted summary judgment on Midland's claims for negligence and strict responsibility misrepresentation turns on this question: May Midland seek damages from Semco through claims for negligence and strict responsibility misrepresentation for expenses Midland incurred to repair damaged homes, losses Midland incurred to satisfy homeowners' claims, and Midland's lost profits? We conclude that the economic loss doctrine bars Midland's claims.
A. Economic Loss Doctrine: Basic Principles
The economic loss doctrine, broadly stated, is a judicially created doctrine providing that certain purchasers of products cannot, via certain tort theories, recover from the product manufacturer damages that are solely "economic" in nature. See Daanen & Janssen, Inc. v. Cedarapids, Inc., 216 Wis. 2d 395, 400, 573 N.W.2d 842 (1998); see also Van Lare v. Vogt, Inc., 2004 WI 110, , 274 Wis. 2d 631, 683 N.W.2d 46; Sunnyslope Grading, Inc. v. Miller, Bradford & Risberg, Inc., 148 Wis. 2d 910, 921, 437 N.W.2d 213 (1989).
"Economic" loss is generally defined as damages resulting from inadequate value because a product is inferior and does not work for the general purpose for which it was manufactured and sold. Daanen, 216 Wis. 2d at 400-01. The economic loss doctrine does not bar recovery under tort theories for personal injury or for damage to "other property." Id. at 402. "Other property," generally defined, means "property other than the product itself." Wausau Tile, Inc. v. County Concrete Corp., 226 Wis. 2d 235, 248, 593 N.W.2d 445 (1999); see also Bay Breeze Condo. Ass'n v. Norco Windows, Inc., 2002 WI App 205, , 257 Wis. 2d 511, 651 N.W.2d 738. At the same time, " amage by a defective component of an integrated system to either the system as a whole or other system components is not damage to 'other property' which precludes the application of the economic loss doctrine." Wausau Tile, 226 Wis. 2d at 249.
B. Wausau Tile Controls Midland's Tort Claims and Precludes the Damages Midland Seeks on Those Claims
In Wausau Tile, the supreme court applied the economic loss doctrine, and its "other property" exception, to bar tort claims for the same types of damages that Midland seeks here. In that case, a manufacturer, Wausau Tile, made "pavers." Pavers are concrete paving blocks made of cement, aggregate, water, and other materials. Id. at 241. A substantial number of the pavers that Wausau Tile made with cement supplied by Medusa were defective. These defective pavers led to demands and lawsuits against Wausau Tile. Id. at 242.
Wausau Tile sued Medusa, alleging torts and other claims. Wausau Tile alleged that the pavers failed, in part, because the cement provided by Medusa was defective. Id. Wausau Tile sought three categories of damages: (1) the costs of repairing and replacing failed pavers; (2) the costs of satisfying third parties' claims that the defective pavers either caused personal injury or damaged property adjoining the pavers, such as curbs and walls; and (3) lost profits and business. Id. at 242-43, 248. The supreme court concluded that Wausau Tile had alleged only economic loss and could not proceed with its tort claims. Id. at 257, 265.
The categories of damages at issue in Wausau Tile are the same as those that Midland seeks here: the costs of repairing its own product, the costs of satisfying third-party demands or claims resulting from the failed product, and lost profits.
The court in Wausau Tile began by addressing Wausau Tile's claims for negligence and strict liability, and then individually addressed
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